Healthcare of Ontario Pension Plan, Toronto, on Thursday reported a net funding ratio of 124% as of Dec. 31, up from 119% at the end of 2012.
On a smoothing basis, the funding ratio was 114% for 2013 vs. 104% for 2012.
The pension fund ended 2013 with a total of C$51.6 billion (US$47.1 billion) in assets, 8.9% higher than a year earlier. Its investments returned 8.55% for 2013, compared to its custom benchmark return of 6.46%.
The asset increase was driven by C$1.9 billion in inflows from contributions as well as the investment returns, Jim Keohane, president and CEO of HOOPP, said in an interview. Outflows totaled C$1.6 billion.
Liabilities increased 3.9% to C$41.5 billion.
“We're pleased with the results,” Mr. Keohane said.
The pension fund uses a liability-driven investing strategy, but does not provide specific asset-class returns, in part because the overall portfolio is structured with derivative overlays. Its return-seeking portfolio returned 14% in 2013, Mr. Keohane said.
Looking ahead, Mr. Keohane said HOOPP will be cautious on equities and credit; the pension fund was overweight both for the previous three years but is now more neutral.
HOOPP's target allocations are 30% long-term options; 10% each Canadian equities, U.S. equities and credit; 8.5% international equities; 5% private equity; and the remainder in absolute-return strategies.